Posted by Tim Stobbs on January 6, 2010
I’ve heard from several people that the first $100,000 of investments are the worst and after the last three years I can believe it. It’s been a very long road to get here. Back in Dec of 2006 my investment net worth were a mere $32,100. By the end of 2007 I was at $50,700 and then 2008 knocked me back down to $49, 100. So the majority of my growth was in the last year. So what happened exactly in 2009?
Well I’ve been looking at the numbers to sort that out since in my mind I didn’t do very much different than the previous years. Yet this is the factors that leap to my mind when I looked at the numbers in detail:
- Do Not Underestimate a Bottom in the Market. During the market drop in 2008 and into 2009 I never stopped investing. Was it scary? Hell yes! But I keep buying stocks that looked attractive and kept putting money. The pay off was a huge surge in growth. For example my TFSA did a 54% return while my wife’s TFSA managed a 30% return.
- A Good Pension Plan. I took a new job at the end of 2008 with a damn good defined contribution pension plan. I contribute 5% and they put in 6%. Yet I can also tap two other programs to boost my employer’s contribution from 6% up to a total of 11%. So grand total that’s equal to 17% of my salary going into my pension plan. So when you add that to a bit of growth its easy to see how it went from nearly $0 to over $15,000 in a year.
- Have a Plan. In 2009 I wanted to add $25,000 to our various accounts (I’ve yet to confirm if I made that goal). That goal helped me to stay focused on adding to our investments regardless of everything else in my life. I kept at it and made sure to keep investing even when I had doubts (which trust me I had them).
- Luck helps. I won’t lie to you my TFSA result was more about dumb luck than skill. I picked three stocks for that account which I bought mainly for their distributions (on average a 10% yield) and they just happen to do very well over 2009. Also me getting the second job at the School Board obviously helps with boosting my cash available for investing for the last two months of 2009.
So overall I would say the three things that got me to my first $100,000 was having goals, being stubborn enough to follow the plan and a bit of luck. So I’m sorry to say I don’t have any investing secrets to share or a plan to make you rich fast. It all comes down to deciding your goals and keep working for them even when things get hard.